Insurance experts recommend paying for minor home repairs out of pocket instead of filing home insurance claims. This is because every claim you make can cause your insurer to raise your premiums. The increase will typically depend on the number of claims recently filed as well as the type and size of the claim filed.
Worse still, making too many claims within a short period can cause the insurer to drop you, citing high risk. Additionally, your claim records will go to the Comprehensive Loss Underwriting Exchange (CLUE) report, which can affect your home insurance eligibility in case you switch insurance companies.
Here’s a look at how filing a home insurance claim can impact your home insurance rates.
How Long Will Home Insurance Claims Stay on My CLUE Report?
When conducting insurance underwriting, insurance companies usually review the history of your property in the Comprehensive Loss Underwriting Exchange (CLUE) report. Typically, the home insurance claim records can stay in the CLUE report anywhere from 5 to 7 years. Take note that if you purchase a previously occupied house, the CLUE report on this property will also affect your insurance premiums, provided the claim history still appears. More specifically, if the previous homeowner filed many claims, the insurance provider will likely classify this home as high risk and probably charge you higher premiums.
Are There Laws That Prohibit Insurers from Raising Premiums?
Each state, through the Department of Insurance, regulates its insurance industry. In other words, while insurance companies can raise home insurance premiums following many claims, there are limits they can’t surpass. The National Association of Insurance Commissioners (NAIC) also ensures that American consumers access insurance policies at fair prices. If your insurer overcharges you, consider filing a complaint with your State Insurance Commissioner or the Division of Consumer Services.
Common Claims That Can Likely Cause a Premium Increase
Insurance companies view claims differently depending on the severity as well as the possibility of them happening again. For instance, unlike weather-related perils, which often occur infrequently, theft, vandalism, and water damage are more likely to recur once you file a claim. As such, the insurance company will likely raise your premiums or even drop you if you file a claim due to these perils. Additionally, if you file a large claim, your insurance premiums will go up since the insurer will consider you high risk.
How to Keep Your Home Insurance Rates Down
It is worth noting that filing several insurance claims can cause your home insurance premiums to go up. That said, the best way to keep the premiums low is by paying for minor repairs out of pocket. Experts recommend paying for damages out of pocket provided the cost of the claim is lower than your deductible, except for liability cases that may attract lawsuits, in which case you should notify the insurance carrier. By avoiding filing claims for minor repairs, you will keep your CLUE report clean and your insurance premiums low. Some of the other ways to lower your home insurance premiums include:
• Bundling your policies
• Asking for discounts
• Improving your credit score
• Mitigating risks in your home such as installing a security system, smoke detectors, and disaster-proofing your home
• Shopping around
• Raising your deductible
• Relocating to safer grounds
Before filing a home insurance claim, you should evaluate the situation because filing a claim will likely cause your premiums to increase. To find the home insurance that suits your needs and budget, contact the team at C.V. Mason Insurance Agency. Our home insurance policies work to protect residents in Bristol and neighboring cities in Connecticut. Give our experts a call for more information.